Somebody reported them and ofsted launched an investigation and told them they were no longer allowed to do this. This was because it was an arrangement where they were 'rewarded' ie by having their child looked after in return for looking after the other child, and because it amounted to over a maximum limit of hours per year. Absolutely ridiculous.
The Education Minister has since clarified that such arrangements can take place once the legislation is amended but it does show you how highly regulated childcare is. Ad astra per aspera